Correlation Between Falcons Beyond and Brookfield Business

Can any of the company-specific risk be diversified away by investing in both Falcons Beyond and Brookfield Business at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Falcons Beyond and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcons Beyond Global, and Brookfield Business Partners, you can compare the effects of market volatilities on Falcons Beyond and Brookfield Business and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Falcons Beyond with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and Brookfield Business.

Diversification Opportunities for Falcons Beyond and Brookfield Business

0.48

Correlation Coefficient

Falcons Beyond  Brookfield Business

Very weak diversification

The 3 months correlation between Falcons and Brookfield is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and Falcons Beyond is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Falcons Beyond Global, are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of Falcons Beyond i.e., Falcons Beyond and Brookfield Business go up and down completely randomly.

Pair Corralation between Falcons Beyond and Brookfield Business

Given the investment horizon of 90 days Falcons Beyond Global, is expected to generate 3.18 times more return on investment than Brookfield Business. However, Falcons Beyond is 3.18 times more volatile than Brookfield Business Partners. It trades about 0.05 of its potential returns per unit of risk. Brookfield Business Partners is currently generating about 0.07 per unit of risk. If you would invest  799.00  in Falcons Beyond Global, on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Falcons Beyond Global, or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Falcons Beyond Global,  vs.  Brookfield Business Partners

Falcons Beyond Global,

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Falcons Beyond exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Business

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Brookfield Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Falcons Beyond and Brookfield Business

The main advantage of trading using opposite Falcons Beyond and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond position performs unexpectedly, Brookfield Business can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brookfield Business will offset losses from the drop in Brookfield Business' long position.

The idea behind Falcons Beyond Global, and Brookfield Business Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.